Riyadh, UAE – High growth rates in the UAE and Saudi Arabia economies are positive indicators for consultancies, according to Vijay Valecha, Chief Investment Officer, Century Financial. He said that the two economies will likely grow by 4.2 percent and 3.7 percent, respectively, in 2023.
“The outlook for the MENA region is good overall as investors are increasingly choosing to invest funds within the local economies rather than Europe to capitalize on the growth and attractive value add opportunities,” Valecha said. “This provides a solid backdrop for consulting companies and boosts the demand for their expertise.”
Source Global Research in its recent report ‘The GCC Consulting Market in 2022’, said that the GCC consulting market saw a rapid return to growth in 2021 with revenues rising 17.7 percent. This has boosted demand across the market due to the government efforts to push investment and economic transformation programmes across the region, which were aided by the UAE Expo 2020, FIFA World Cup 2022, and Saudi Vision 2030.
Saudi Arabia’s consulting market, the largest in the GCC, rose 18.8 percent in 2021, recording the fastest growth in the region as the country recovered quickly from the pandemic.
The report said that in the UAE, the region’s second-largest market, consulting grew 16.6 percent.
Valecha said despite the general trend of global market decline, Saudi Arabia and the UAE have had a good year due to the booming oil prices, the flourishing real estate market, and the government’s launches of technology-focused projects that have contributed to significant growth in non-oil industries.
Saudi Arabia’s consulting market, the largest in the GCC, rose 18.8 percent in 2021, recording the fastest growth in the region as the country recovered quickly from the pandemic.
Global Research
Some notable examples are the digital partnership between First Abu Dhabi Bank and IBM Consulting and Ernst and Young’s involvement in the integration of Saudi’s National Water Company.
“Consultancy business is strongly tied to the country’s economic performance and thus has reflected strong performance owing to the expansion in the oil and non-oil-based sectors,” the report said.
When asked about the lessons learned in 2022, Valecha said it was about being prepared for unexpected events. He said that the pandemic and Russia-Ukraine conflict had highlighted the need for consultants to have contingency plan in place to deal with disruptions and crises and to be able to quickly adapt to changing circumstances.
“It has also encouraged the need for flexibility and adaptability in their approach to problem-solving in combination with clear and frequent communication with clients and other stakeholders to deal with unpredictable events,” Valecha said.
“Lastly, the importance of leveraging digital technologies and the remote working option to continue providing services to their clients despite the challenges posed to them.”
The construction and its ancillary sectors, according to Valecha, drive growth in Saudi Arabia.
“The construction sector is anticipated to rise by 3.2 percent in 2022, with an upcoming annual average growth rate of 4 percent between 2023 and 2026,” he said. “The spillover impact on residential, cultural, leisure and hospitality sectors is bound to lead to business growth.”
Within the UAE, the government’s focus and continuous support to companies within the financial technology, consumer, healthcare and agriculture technology sectors is increasingly proving fruitful and expected to lead the momentum in 2023, he said.
Valecha believes that the global and wider economic trends are the most likely threats to the domestic economy and, thus, the consultancy business in 2023.
“Given that both the UAE and Saudi currencies are pegged to the US dollar, the economic turmoil in the US will have some effect on local business,” he said. “However, the expectations of the Fed considering slowing down the rate hikes going forward, combined with the lagged impact of the 2022 hikes playing out in 2023, one can expect any external impact on the region to be transient.”
He said that the biggest advantage of the Saudi and UAE markets is the solid economic fundamentals that will help offset exogenous pressures and shield domestic growth and demand for consultancies.
Besides, government support, domestic and international investors are expected to play a pivotal role in the advancement of the economies, Valecha said.
“Their involvement may be in the form of direct investment, business relocation, or business expansion, aiding the diversification of the non-oil sectors and opening new avenues for growth as consumer spending and exports strengthen,” he noted.